The Bank loan was approved in FY90 and closed in FY98, after an eighteen months extension.

Objectives: (i) increase agricultural productivity, cropping intensity and incomes of about 43,000 small-scale farmers on about 60.000 ha; (ii) reduce market risks by smoothing out production throughout the year; (iii) develop the technological base for the future development of the La Mojana Region; (iv) improve cost recovery from public sector investment in irrigation; (v) strengthen community participation in the construction, financing and O&M of small scale irrigation schemes. Components (as approved): (i) Construction of about 850 small-scale irrigation supply systems; (ii) Provision on credit of on-farm investments, inputs and irrigation equipment to beneficiary farms; iii) Technology development, contracting of extension services (supported by TA), and farmer training in irrigation O&M and community organization; (iv) strengthening of the irrigation agency and related entities; (v) reforestation and conservation works in irrigation system catchments, and supervision of environmental aspects of the systems; and (vi) studies and pilot investments to develop an environmentally sound strategy for the agricultural development of La Mojana Region (450,000 ha of flood plains). Restructuring: After a delayed start-up and slow progress, it was recognized that the project objectives and components set unrealistic targets. The Bank agreed in early 1994 to restructure the project to take account of implementation capacity and also changes in sector policies and institutional arrangements. (A new irrigation law in late 1992 aimed to make investments more demand driven, with emphasis on social returns, small farmers, community participation, market access and cost recovery). The number of SSI schemes was cut from 850 to 250, which reduced the area from 60,000 ha to 17,000 ha and the beneficiaries from 43,000 to 17,000. In addition, (a) a medium-scale irrigation component (20,000 ha and nearly 1,000 farmers) was added to pilot the new policies, and (b) funds were allocated for preparation studies of medium and large-scale irrigation schemes. In late 1995 the Bank also agreed to fund rehabilitation of about 116 SSI schemes (incl. 45 funded under this loan) which were not functioning properly. Costs and financing: Actual project costs were US$ 76.2 million (39 percent of the appraisal figure of US$ 196 million) of which the Bank financed US$ 44.1 million (56 percent of US$78.2 million). US$ 28.2 million of the loan was canceled in FY93 and the remaining US$ 5.9 million is to be canceled.

3. Achievement of Relevant Objectives:

The project substantially achieved its modified physical goals (completion of 226 schemes out of 250 planned), and rehabilitated the 116 SSI schemes added in 1995, but fell well short of the original targets (a quarter of the original target schemes and 42 percent of the original targets for beneficiaries and irrigated areas). Some projects are highly successful while others are giving modest returns or have failed (numbers are not given), but reliable data is not yet available on whether production, cropping intensities and rural incomes have increased overall as intended. Progress on marketing and diversification has been less than planned and mixed. La Mojana research program for the flood plain ecosystem is making a major contribution in terms of innovative integrated research methods, but the scope of the component proved beyond available resources and a sustainable strategy has still to be developed. Cost recovery was delayed but significant progress has been made. Community participation in SSI development and O&M has made substantial progress. Although the planning of the medium scale scheme successfully tested the new policies, local funds were not available for construction. The ICR does not comment on whether preparation studies were completed for future irrigation schemes.

4. Significant Outcomes/Impacts:

(a) Substantial progress has been made in the development of an appropriate approach and institutional capacity to promote community involvement in SSI projects on a sustainable basis, in keeping with the new irrigation policy (an operational manual for SSI developed under the project is being used as a model in other countries); (b) farmers' acceptance of responsibility for part of project investment costs and all O&M costs is a major accomplishment and a break from the past.

(a) Scaling up from the precursor pilot project was too ambitious (re institutional capacity and local cost financing); (b) institutional analysis was weak - the irrigation agency was ill-suited to implement the project since it had an engineering orientation and knew little of agriculture or community organization; (c) seeking cost contributions from small farmers, without piloting or assured credit arrangements, was a design flaw; (d) key project risks were underestimated and measures for addressing them were inadequate; (e) the economic rate of return was not reestimated because of lack of data.

6. Ratings:

ICR

OED Review

Reason for Disagreement/Comments

Outcome:

Unsatisfactory

Unsatisfactory

Institutional Dev.:

Partial

Modest

Sustainability:

Uncertain

Uncertain

Bank Performance:

Satisfactory

Unsatisfactory

The Bank's improved performance during supervision does not outweigh the unsatisfactory performances during identification, preparation and appraisal.

Borrower Perf.:

Deficient

Unsatisfactory

Quality of ICR:

Satisfactory

7. Lessons of Broad Applicablity:

The overriding lesson is that adequate quality control and managerial oversight of Bank operations is essential to avoid costly repetition of the familiar (even in the late 1980s) failings and flaws identified in the ICR.

8. Audit Recommended? Yes

Why? a) To explore further another example of irrigation development with farmer participation and decentralization of management, and (b) to get a better handle on performance of the schemes and necessary follow-up.

9. Comments on Quality of ICR:

The quality of the ICR is satisfactory given that this was a complex and many-faceted experience, but could have been improved if the following points had been taken into account: (a) some attempt at economic and financial analysis using whatever information was available; (b) key indicators (Table 5) set out in a more conventional manner to show original and revised targets and achievements clearly, and (c) some quantitative assessment/ranking of scheme performance to flesh out para. 6 comments about variability.